D.C. Foresees Big Need for Office Space

The District will add jobs steadily in the decades ahead, creating demand for new office space that will be met with construction in what are now underdeveloped neighborhoods, according to a study to be released this week.

The District will create an average of 7,200 jobs a year from now to 2030, including about 5,500 office jobs annually, according to the study, commissioned by the Downtown D.C. Business Improvement District and the Office of the Deputy Mayor for Planning and Economic Development.

The office jobs will be concentrated in government agencies, law firms, and other professional service providers and trade associations, a familiar pattern. New non-office jobs will include a wide range of retail and other service jobs in industries that serve those generally well-paid office workers, according to Delta Associates, the research firm that conducted the study.

To accommodate the new office workers, the District will need 48 million additional square feet of office space by 2030. There is now about 106 million square feet of occupied office space in the District.

Downtown Washington, an area bordered by the National Mall to the south, Massachusetts Avenue to the north, Union Station to the east and Rock Creek Park to the west, is nearly built out, the study concludes, given restrictions on building heights in Washington.

"We've only got three to five years left of inventory in the traditional downtown," said Richard H. Bradley, executive director of the business improvement district.

Most of that 48 million square feet of extra space will have to go into neighborhoods that are not now major centers of office development. The report concluded that there is undeveloped land in the District that could accommodate about 59 million square feet of office space. The report cites the area north of Union Station, where development is already widespread, as the most immediate opportunity.

Next in line for likely development, the study says, are the Southwest Waterfront community and the area surrounding the Southeast Federal Center, both of which are near the planned baseball stadium. In the more distant future, the report finds, the campus of St. Elizabeths Hospital in Southeast, the South Capitol Street corridor and the Petworth neighborhood might provide space for office development.

The study notes some risks. The research finds that the cost of doing business in the District is sharply higher than in close-in suburbs such as Arlington and Silver Spring because it has higher rents, building operating expenses, property taxes and corporate income taxes, factors that have resulted in cost-sensitive tenants moving out. And the study said the District's continued prosperity depends on further investment in the Metro system and on growth in government-related industries.

Moreover, even with strong job growth in recent years, unemployment in the District has remained elevated, with better-paying jobs going to suburbanites and newcomers. "We have to do a better job connecting education and job training with the jobs that are being created," said Stanley Jackson, the deputy mayor for planning and economic development.

Closings

* Buchanan Street Partners Inc. and Access Property Services Inc., both of California, bought a seven-building portfolio in Northern Virginia for $110 million. Buchanan described the buildings as "mid-rise, B+ office buildings in the Reston, Fairfax and Tysons Corner" areas. It said the buildings are about 85 percent occupied with tenants including Boeing Corp., ITT Technologies Inc. and Raytheon Co.

* Buchanan Partners LLC of Gaithersburg sold its Lakeside at Loudoun Tech office complex on Route 7 in Sterling to New York-based Tishman Speyer Properties LP for $88.5 million. The complex has three buildings on a nine-acre lake. VeriSign Inc., the Internet services company, occupies more than half the space. Brokerage Cassidy & Pinkard arranged the sale.